Life Insurance Lowdown

–By Priya Jestin, Staff Writer

Insurance can be a costly affair. The price you pay for life insurance will depend on various factors including your age, health and habits. While term life insurance does offer attractive rates when compared to life insurance, it’s still important to shop around for the best policy available. Otherwise you may end up paying a lot of money for a cover that is not half as good as it could be.

One of the biggest mistakes people make is to take up the first offer they get. If you want good terms, you have no choice but to look around and know more about the rates offered by various insurance companies. Most people don’t know that term life insurance policies can vary by 50 percent for the same coverage!
Shop around for the best rates at InsWeb’s (www.insweb.com/ ) quick and easy online marketplace.

Could it get any lower — I have a feeling that if this trend continues, very soon, we’ll get life insurance for free (I know that’s like too much wishful thinking but hey, why not). According to the Insurance Information Institute, premiums for individual life insurance are expected to continue a downward trend in 2007 with a drop about 4 percent. Chron.com reports:

The reduced premiums are expected for both term and permanent life insurance, the III said. Term life insurance provides protection for a specific period of time, say 20 years, and pays a benefit if the purchaser dies in that period. Permanent life insurance promises a death benefit as long as the consumer pays the premiums.

Read more: Forecast: Insurance Premiums to Fall

While there are many people who will vouch for a term life insurance over a whole life policy, there are others who beg to differ. According to them, a term life policy is like renting a home — in the beginning, renting is much cheaper, but in the long run buying is cheaper. Pensacolanewsjournal.com reports:

Term programs really only have one advantage over cash value policies. That advantage is the price. Term insurance is typically much cheaper than whole life insurance, a permanent-level insurance protection from policy issue date to the death of the insured…However, with term insurance, after the term is over, expect the price to increase significantly.

Read more: Select life insurance that fits your needs

Most people tend to worry about the type of insurance they should take. Is a term insurance or whole life insurance better in the long run? The simplest route is to take a term insurance. It makes the most sense. There is also no need to splurge on your insurance. You should buy just as much insurance as you need, and only for as long as you need it.

When you take a term insurance policy, you will be paying only the amount required for insurance. You are not charged anything extra as ‘investment’. So, the money you save when you opt for term insurance can be put to better use. You can invest it in long-term investments like stock market index funds, or any other kind of investment. By combining term insurance with investments on your own, you’ll be minimizing your insurance costs and maximizing your investment potential. Another plus for term insurance is that it’s a very competitive segment of the insurance business, with companies open to lowering costs to win customers.

There’s no doubt about the fact that term life offers one of the best value-for-money investments in the entire financial services arena. With a term life policy, you can literally get hundreds of thousands of dollars in protection for just a few pennies per day. Well, that was a bit of an exaggeration, but you get my point don’t you?

And the best thing is that today, the rates for a term life insurance policy is at its lowest ever. If this isn’t reason enough for you to go get yourself a policy, I don’t know what is. However, even though prices are low, it doesn’t mean that you can walk into an agreement with your eyes closed. A little exploration can help you get the best deal for yourself. Forsalebyowner.com reports:

Check for price breaks. Companies often offer “price breaks” at certain coverage amounts (e.g., $250,000 vs. $225,000). The truth is that many people can actually pay less money for more coverage. Check how little your prices increase when you increase coverage to $250,000, $500,000, or $1,000,000.

Read more: Term Life Insurance: Money Saving Tips

Insurance can be a costly affair. The price you pay for life insurance will depend on various factors including your age, health and habits. While term life insurance does offer attractive rates when compared to life insurance, it’s still important to shop around for the best policy available. Otherwise you may end up paying a lot of money for a cover that is not half as good as it could be.

One of the biggest mistakes people make is to take up the first offer they get. If you want good terms, you have no choice but to look around and know more about the rates offered by various insurance companies. Most people don’t know that term life insurance policies can vary by 50 percent for the same coverage! Shop around for the best rates at InsWeb’s quick and easy online marketplace.

Term life insurance is life insurance at its simplest. When you opt for term life insurance, you should know that it is temporary in nature and covers only a specific period. If you insure yourself for a particular period and you die during the policy term, then the death benefit will be paid to your beneficiary. Once the term expires, the insurer usually does not have to pay out. This is the main reason why term insurance is extremely inexpensive when compared to life insurance.

While term life insurance policies do have their limitations, it still is the best option for people with limited means. Your term life insurance policy offers coverage to pay a death benefit, which is usually income tax free, as long as the policy is in force and premiums are current.

When you are trying to assess policy cover, it is important to know the different types of term. Annual renewable term (ART) allows you to renew your contract each year without a medical exam. In such policies, the premium may increase each year.

Then there is the guaranteed level premium, which can start with a higher premium than the ART. The benefit of this type is of term policy is that you can lock in that rate for around 10 to 20 years. Once this period is up, you may have to take another medical exam and buy a new policy. Here are a few things you ought to keep in mind when finalizing your term life insurance:

• Ensure that you buy enough life insurance to meet your needs. Don’t skimp; term life insurance is extremely affordable. You must match the term to your needs.
• When you purchase a term life insurance policy, you must ensure that your dependents are covered until such a time that they can provide for themselves.
• Use the calculators provided on various websites like InsWeb.com to know how much to insure yourself in order to ensure that you have covered your dependents well.

I wouldn’t be too off the mark if I said that today you can get a life insurance policy at the price of peanuts. Life is indeed getting cheaper and aging populations, the Internet and a number of other factors in recent years have forced down the cost of term life insurance.

However, the good news doesn’t seem to have reached a majority of Americans. There are quite a few people still holding on to more expensive policies that they bought years ago or they many not have insured themselves highly enough. According to experts, the salary that many employers offer their staff isn’t enough to leave dependents. The paradox here is that though it is cheaper than ever to complement their coverage with other policies, not enough people are doing it! Heraldnet.com reports:

Mike Kalen, executive vice president of Hartford Financial Services Group Inc.’s individual life division, attributed the decline to a number of factors, including longer life expectancies and improved technology. Insurance companies, he said, have become more efficient at collecting information and assessing potential candidates.

Read more: Many pay too much for life insurance

It’s one thing to say that you can get competitive rates for term life insurance policies and another to actually find a firm that offers the most competitive rates It is imperative that you shop around, since companies structure rates and guidelines for term life insurance uniquely. Here are a few tips, which if you follow, will help you find the best term life insurance quote:

• The Internet is your best bet when it comes to searching for and collating together a list of insurance firms that offer term life insurance.
• Secondly, whittle down this list to the handful that offer competitive rates.
• If you want a tentative idea of how much you’ll need to shell out, check InsWeb.com. The website offers quotes from a remarkable database of insurers and can give you a more or less accurate picture of the premium you’ll need to pay.
• Now you can compare the rates again and cull your insurer’s list further depending on their individual quotes. Once you’ve checked the financial ratings of these insurers, it is time to call them up and know more about the policy on offer.
• If you feel that the insurers on your list are not offering competitive term life insurance quotes, then try calling an independent insurance agent before you call up the insurance firms. Find out if the agent can beat the quotes on offer from the firms. Don’t worry; the premiums will not cost you more because you approached an agent, and they may even be able to offer you more competitive quotes than the companies.
• If you feel that you need personal contact, then don’t hesitate to find yourself a good agent rather than approach the companies yourself. However, it is important that you find yourself a good agent. A good idea would be to look for agents who have the designation CLU (Chartered Life Underwriter).